Amid Congressional PBM scrutiny, CVS/Aetna CFO assures investors of continued profits, even at expense of employers and taxpayers

By Wendell Potter - When I began handling financial communications for Cigna, I learned quickly that C-Suite executives often say things to investors and Wall Street financial analysts they wouldn’t dare say out loud to reporters or politicians. Occasionally, though, reporters and politicians catch wind of an executive’s candid remarks at an investor conference. Whenever that happens, you can be certain the company’s lobbyists and PR people pivot to damage control. Read Full Article…

VBA Article Summary

1. CVS's Chief Financial Officer, Shawn Guertin, assured investors at the 2023 Bernstein Annual Strategic Decisions Conference that CVS will continue to protect the profit margin of their Pharmacy Benefit Managers (PBMs), even amid scrutiny from both Democrats and Republicans in Congress. Guertin suggested that if lawmakers enforce changes to the business practices of PBMs (which are middlemen in the drug supply chain), the company will find other ways to safeguard their profits​¹​.

2. PBMs have grown substantially in recent years and are now more profitable than insurers' health plan businesses. CVS's PBM, Caremark, contributes more to CVS's total revenues than Aetna, the large insurance company it acquired in 2018, or its 10,000 retail stores. Caremark became the company's most profitable division last year, contributing $7.4 billion to CVS's total operating income of $17.5 billion​¹​.

3. The potential legislative changes could ban common industry practices, such as charging employer and government customers more than what is paid to pharmacies for a drug and pocketing the difference. Guertin stated that if these changes occur, it could lead to higher costs for employers and health plans. This statement indicates that CVS would find ways to maintain its profit level even if reforms like drug rebates were implemented. However, this might come at the expense of their customers​¹​. This reflects a broader trend in the private insurance industry, where companies have grown larger and more profitable since the Affordable Care Act was passed, often at the expense of patients, who face increasingly unaffordable out-of-pocket requirements​¹​.

Better Predicting Drug Safety Calms Quarrels Between Medical Needs & Regulatory Process

By Isaac Bentwich - Human tissues, coupled with AI that can deal with terabytes of data will blow mice models out of the water. With animal testing requirements finally removed, the pharma industry and its constituents can hope for faster innovation. Healthcare incentives, price transparency, patent length, and the interaction between medical needs and regulatory processes all need to be re-examined. While there is lots of disagreement, the industry seems to agree on one thing: The system is broken and isn’t serving patients as well as it could be. But how can we fix it? Read Full Article…

VBA Article Summary

1. With the removal of animal testing requirements, the pharmaceutical industry is turning to artificial intelligence (AI) and human tissues for drug testing. This shift promises to significantly speed up the innovation process as it surpasses the limitations of traditional animal models​¹​.

2. The future of drug safety prediction lies in human cells and advanced technologies. Specifically, human liver cells are currently the most effective at predicting drug toxicity. Furthermore, the possibility of accurately and quickly testing multiple organ models on a chip could lead to better predictors of drug efficacy. In line with this, the first AI-derived drug candidate is already in development, which signifies a significant step forward​¹​.

3. The drug approval process should be more flexible and tailored to the specific characteristics of each drug. The traditional approval process, which involves multiple stages of studies and trials, can delay the availability of lifesaving drugs due to outdated legislative requirements. This delay can be extremely costly for patients in critical need. The article suggests that some drugs should be fast-tracked to ensure patient needs are met more timely​¹​.

AstraZeneca Teams Up With Startup Quell in Type 1 Diabetes, IBD Cell Therapy Pact

By Frank Vinluan - AstraZeneca is paying $85 million to kick off an alliance with Quell Therapeutics focused on developing new cell therapies for autoimmune diseases. Type 1 diabetes and inflammatory bowel disease are the focus of the research collaboration. AstraZeneca’s drug research strategy includes developing new medicines that address underlying causes of disease. Autoimmune disorders are one area of strategic focus, and the pharmaceutical giant is now turning to a cell therapy startup to begin a collaboration that could yield new treatments intended to stop immune responses driving two prevalent inflammatory conditions. Read Full Article… 

VBA Article Summary

1. AstraZeneca has formed a collaboration with Quell Therapeutics, investing $85 million to develop new cell therapies for autoimmune diseases. The primary focus of the research collaboration will be on type 1 diabetes and inflammatory bowel disease​¹​.

2. Quell's research centers around using a patient's Tregs (regulatory T cells) and engineering them to target specific areas in the body. Once engineered, these cells are reinfused into the patient to perform anti-inflammatory work. Quell's main internal project is a potential cell therapy for preventing organ rejection in liver transplant patients, which is supported by $156 million Series B financing closed in 2021​¹​.

3. As per the deal with AstraZeneca, Quell is responsible for the process development and manufacturing of the cell therapy candidates for type 1 diabetes and inflammatory bowel disease through the end of Phase 1 clinical testing. If successful, Quell could earn more than $2 billion in milestones, plus royalties from sales of any commercialized therapies that result from the partnership. The agreement also grants Quell an option to share with AstraZeneca in the development of Treg therapies for type 1 diabetes in the U.S., potentially receiving additional milestone payments and higher royalties on U.S. net sales​¹​.

US Chamber of Commerce sues over government's drug pricing power

By Jonathan Stempel - The U.S. Chamber of Commerce on Friday sued the federal government, challenging a new law that for the first time gives Medicare the power to negotiate drug prices with pharmaceutical companies. In a complaint filed in federal court in Dayton, Ohio, the chamber said the pricing program violated drugmakers' due process rights under the U.S. Constitution by giving the government "unfettered discretion" to dictate maximum prices.
Read Full Article…

VBA Article Summary

1. The U.S. Chamber of Commerce has filed a lawsuit against the federal government, challenging a new law that allows Medicare to negotiate drug prices with pharmaceutical companies for the first time. The Chamber argues that this pricing program violates drugmakers' due process rights by giving the government too much power to set maximum prices, and it imposes severe penalties on companies that don't accept these prices​¹​.

2. The lawsuit follows a similar action by Merck & Co. Both lawsuits argue that price controls could deter pharmaceutical companies from developing new drugs, potentially causing long-term harm to the health of Americans. Other drugmakers have also expressed objections to the pricing program, part of the Inflation Reduction Act, which will lead to price changes for 10 expensive drugs selected by CMS starting in 2026​¹​.

3. The Biden administration is aiming to save $25 billion per year by 2031 through Medicare's negotiation of drug prices. However, the Chamber warns that allowing this pricing program could set a dangerous precedent, with the potential for the government to impose price controls in other industries​¹​.T

The Facts About Medicare Spending

By KFP - Medicare provides health insurance coverage for more than 65 million people, nearly 20% of the U.S population – a share which will grow larger in the coming decades. In 2021, Medicare spending comprised 13% of the federal budget and 21% of national health care spending. Given Medicare’s essential role as a source of coverage for an aging population and the importance of sustaining the program for future generations, Medicare is often part of discussions about total federal government spending, health care spending in the U.S., and the affordability of health care costs. Read Full Article… 

VBA Article Summary

1. Medicare plays a crucial role in the U.S. health care system:

   • Medicare provides health insurance coverage for more than 65 million people, which is nearly 20% of the U.S. population.

   • In 2021, Medicare spending accounted for 13% of the federal budget and 21% of national health care spending.

   • As the population ages, Medicare's role will become even more significant, and discussions about federal government spending and health care affordability often involve Medicare.

2. An aging population leads to higher Medicare enrollment:

   • With the aging of the U.S. population, the number of people covered by Medicare has been increasing and will continue to grow in the coming decades.

   • The share of older adults, particularly those aged 80 and above, within the Medicare population is also increasing.

   • Medicare beneficiaries are projected to increase from around 63 million in 2020 to over 93 million in 2060.

3. Medicare spending faces challenges from rising costs and enrollment:

   • Growth in total Medicare spending is driven by increased enrollment and higher health care costs per beneficiary.

   • Factors influencing spending growth include the volume and use of services, new technologies, and rising prices.

   • Medicare spending per person has been on par with or lower than spending per person with private insurance, but it is projected to rise in the future.

   • The Medicare Hospital Insurance Trust Fund, responsible for Part A benefits, is projected to face solvency challenges in less than 10 years due to enrollment growth and a shortfall in revenues.

   • Medicare spending increases have led to higher premiums and out-of-pocket costs for beneficiaries over the years.

The Road to Maternal Health Runs Through Medicaid Managed Care

By The Commonwealth Fund - We face a maternal mortality crisis. U.S. maternal mortality rates exceed those in other high-income countries, and the latest evidence shows rising rates and startling disparities based on race and ethnicity. These trends have roots in systemic racism and gender inequity. Reversing them will take a long-term commitment to redesigning maternal health care to reflect a “continuum approach” to help ensure that health is optimized before pregnancy and that high-quality care is delivered throughout pregnancy, birth, and an extended postpartum period. Read Full Article… 

VBA Article Summary

1. The United States is facing a maternal mortality crisis with rising rates and significant disparities based on race and ethnicity. Medicaid, which covered 42% of all U.S. births in 2020, must play a central role in addressing this crisis. The article emphasizes the need for a "continuum" approach to maternal health, ensuring optimized health before pregnancy and high-quality care throughout pregnancy, birth, and an extended postpartum period​¹​.

2. Improving maternal health for Medicaid beneficiaries involves comprehensive Medicaid managed care plans, which enroll more than 70% of all beneficiaries nationwide. These plans not only pay for care but also organize and deliver it. The article points out that the contracts between Medicaid managed care organizations and states, which serve as blueprints for care, often approach maternal health in a fragmented and incomplete way. The design of these contracts varies significantly between states, reflecting different priorities, system strengths, and the performance capabilities of the managed care industry​¹​.

3. The article concludes with recommendations for strengthening managed care and maternal health. It suggests developing comprehensive maternal health care treatment guidelines that span the full continuum of care, utilizing these guidelines to develop new Medicaid demonstrations, and establishing a best practices initiative that shares innovative approaches to managed care and maternal health​¹​.

Loss of ACA Preventive Care Mandate Could Impact 10M Enrollees

By Kelsey Waddill - With the Affordable Care Act’s preventive care coverage requirement under scrutiny, Peterson-KFF researchers investigated how many Americans rely on the law’s coverage and determined that as many as 10 million people could be affected. The researchers leveraged 2019 claims data—which would not be susceptible to the coronavirus pandemic’s impact—to assess preventive care services utilization. Read Full Article… 

VBA Article Summary

1. The Affordable Care Act's (ACA) preventive care coverage requirement is under scrutiny. A district court ruled that private, employer-sponsored health plans should not be mandated to fully cover all preventive drugs and services as dictated by the ACA, considering it unconstitutional. This situation has led researchers to investigate the potential impact, revealing that as many as 10 million people could be affected​¹​.

2. The study took into account preventive care utilization for certain drugs and services across all private markets, including large and small employer markets and individual health insurance marketplaces. If the district court’s decision is affirmed by a higher court, insurers might be permitted to introduce cost-sharing for affected preventive services and drugs or potentially exclude coverage altogether. The research showed that 5.7% of private payer marketplace enrollees, approximately 10 million Americans, relied on preventive care services covered through the ACA​¹​.

3. The researchers noted that the results might change post-2019 due to major updates made by the US Preventive Services Task Force (USPSTF). These updates include recommendations for PrEP and colorectal cancer screenings. The impact of these changes could potentially grow with each new USPSTF recommendation. A previous study found that six out of ten Americans used preventive care services under the ACA coverage mandate, including vaccinations, wellness visits, and screenings. It was noted that around 70% of children with private health insurance coverage and the same percentage of young women used preventive care. The ruling that deemed the ACA’s preventive care services requirement unconstitutional occurred in March 2023​¹​.